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PFC and REC Merger Creates Power Financing Giant
29 Jun
Summary
- PFC and REC boards approved the merger of two state-run NBFCs.
- The merged entity will manage a loan book exceeding ₹11 lakh crore.
- A share exchange ratio of 88 PFC shares for every 100 REC shares was set.
The Boards of Directors for Power Finance Corporation (PFC) and REC have officially approved a Scheme of Merger, marking a significant development for state-run power sector non-banking financial companies (NBFCs). This strategic move will see REC merge into PFC, creating a consolidated entity poised to become a dominant force in power financing.
The amalgamation is projected to establish a financial powerhouse with an impressive aggregate loan book exceeding ₹11 lakh crore. This integration aims to streamline operations and bolster the financial capacity for the nation's power sector development.
The approved Scheme of Merger details a specific share exchange ratio: shareholders of REC will receive 88 equity shares of PFC for every 100 equity shares they hold in REC. This ratio is subject to a record date to be determined in the future.
This significant merger is not yet finalized and remains conditional upon securing all requisite approvals. These include consent from the respective shareholders and creditors of both PFC and REC, as well as clearance from all relevant regulatory and governmental authorities. Furthermore, the merged entity must continue to qualify as a 'Government Company' under the Companies Act, 2013, with the Government of India retaining majority control.
